Bank of Japan Holds Rates at 0.5% Amid Tariff Uncertainty

The Bank of Japan (BOJ) kept its benchmark interest rate unchanged at 0.5%, as widely anticipated, citing heightened uncertainty stemming from new U.S. tariffs under President Donald Trump. The decision marks the second straight meeting in which the BOJ has opted to hold rates steady, reflecting concerns over the impact of global trade tensions on Japan's export-driven economy. In its policy statement, the BOJ indicated it may reach its 2% inflation target later than previously forecast, with Governor Kazuo Ueda emphasizing that future rate hikes would depend on sustained underlying inflation. The central bank is also expected to cut its economic growth projections due to the trade headwinds, while maintaining that core inflation will remain near target in the coming years. Analysts warn that explicitly delaying the inflation timeline or sounding too dovish could undermine market confidence and further weaken the yen, complicating Japan's economic outlook. The BOJ's cautious stance aims to balance concerns over yen depreciation, import costs, and external criticism, particularly from the U.S.